PRESIDENT Saddam Hussein's defiance over United Nations inspection of Iraqi military sites comes on the heels of a strengthening of his power base in Baghdad, Middle East analysts and diplomats say.The Iraqi president is using this period when world attention is focused mainly on changes in the Soviet Union and Yugoslavia "to test the United States and its allies - to see how much Iraq can get away with," says a senior Iraqi traveling overseas. For the past two weeks Iraq has not allowed UN helicopters to fly unrestricted in search of sites where weapons of mass destruction are made or where they have been deployed. Iraqi Foreign Minister Ahmed Hussein al-Samaraei headed to New York this weekend to talk with UN officials about the inspections issue. Under the Gulf war cease-fire agreement, Iraq is obliged to declare and destroy all such weapons. But the Iraqi leader is not seeking another conflict, the senior Iraqi says, and last week's threat by United States President Bush to use force to back UN inspections is expected to elicit a new policy in Baghdad. Saddam's defiance on UN inspections began at about the same time he was visibly consolidating support - including the dismissal of Saadoun Hammadi, Iraq's prime minister. Mr. Hammadi is reported to be the one man in the regime to have had the courage to challenge and question Saddam's policies. Iraqi sources say Hammadi's sacking was part of a reshuffling that will see members of Saddam's family and party loyalists moved into an increasing number of top jobs. The Iraqi president already has placed several members of his family in top government positions, the security establishment, and the Baath Party. The defense and interior portfolios, for example, are held by Saddam's cousins. Hammadi, a Western-educated economist, had been appointed six months earlier with a mandate to rebuild the Iraqi economy. But the prime minister reportedly knew he could do little to improve his economy while Iraq remains a pariah to the rest of the world. "Mr. Hammadi was the only intellectual in the Cabinet," says an Iraqi academic living abroad. "The others were all party thugs and loyalists of Saddam. He was the one who had the courage to stand up and argue." The former prime minister is said to have urged Saddam to liberalize all aspects of Iraqi life and to be more flexible in foreign relations. In particular, Hammadi is said to have advocated abiding strictly by the UN Security Council cease-fire resolutions. Hammadi put forward these arguments at a meeting of the governing Baath Party, says an influential Iraqi who was in Baghdad at the time. It was then that Hammadi was sacked as prime minister. HAMMADI'S replacement is Muhammad al-Zubeidi, described by one Arab diplomat in the Gulf as "a classic Saddam Hussein 'yes man. The president, he says, "is reconsolidating his power, but on a much narrower base." Amid this redeployment, Western diplomats say Saddam is sticking to his refusal to recognize defeat. Prior to the war, Saddam called the imminent conflict the "mother of all battles." But while most leaders might wish to forget such epithets after such a humiliating defeat, Saddam two weeks ago ordered "mother of all battles" medals to be struck for war veterans. "Saddam Hussein seems determined to act as though nothing has happened," says an Arab diplomat. "He is determined to be as defiant as ever." Defiant Saddam may be, but since Bush's statement, US Air Force squadrons are reported on alert for possible movement to the Gulf. Also, a force of some 2,000 troops from the US, Britain, France, Italy, and the Netherlands, deployed in southeastern Turkey to ensure the protection of Kurds in northern Iraq was to leave soon, but will now remain for three more months. In Washington, top Democratic congressional leaders were reported Saturday to have urged Bush to force Iraqi compliance with UN sanctions by flooding Iraq with UN inspectors, and backing them with armed escorts. Still, Iraq will continue showing a hostile face to the world as long as Saddam remains in power, Western diplomats here say. Democratic reforms, promised by Saddam after the war, have not materialized and there is little chance of any internal move to dislodge him, analysts say. "The circle around him is getting tighter," an Iraqi academic says. "He is shoring up the defenses of his dictatorship."